Sound based payments could revolutionize digital payment infrastructure

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Contactless payment solutions have been globally adopted as one of the most convenient payment methods. Companies across the globe have been working towards advancement of technology that can make this system even more convenient and secure at the same time. In past couple of years, certain companies in South Korea, France, Israel and UK have invested towards development of audio based payment technology. In 2013, mobile payments start-up firm Clinkle raised USD 25 million towards development of a sound based POS terminal. However, the results were differed and a Venmo-like product was created, targeted at college students.

LISNR, a technology start-up based out of Ohio has been finally successful in delivering the technology. This technology is compatible to existing POS terminals and based on advanced, ultra-low power, wireless transmission technology to transfer data through sound waves. Additionally, transactions can be performed using any phone’s microphone picking up these sound waves. LISNR uses private decoding language and every transaction has built-in timing information which is neither recordable nor can be played back.

This technology has proved to be superior that other technologies so far. Firstly, transactions via Europay, Mastercard and Visa (EMV) chip cards is currently considered most encrypted and safest payment mode. But in this case, user needs to wait 5 to 8 seconds after inserting the card into chip reader for completion of transaction. Secondly, barcodes and QR codes have been proven faster, but it is not considered very safe as using static code for data transmit is easier to copy and share. Thirdly, scan-to-pay exchanges are considered safer as it uses transaction code and account information over cloud tapping into payment card on file without disclosing actual card details. However, it is costlier for retailers and less secure. Also, transactions decline rate is 7-12% depending upon quality of scanning screen. Lastly, NFC payments have proven to be successful the most, however, it is limited to NFC enabled phones only.

Sound based payment system is emerging as an alternative to all existing payment processes as it is swift, convenient and secure. It is encrypted and processing time is under 2 seconds. It is localized as no broadcast or cloud component is involved and compatible with any mobile phone.

Sound based payment system has already been launched by digital wallet and payment company FreeCharge in partnership with cashless and contactless payment solution provider Tong Tang in Q1 2017 in India. This payment mode is available on FreeCharge app for Android. It is available at 62 outlets of Trust Pharmacy, mall, office and college parking and NICE toll plaza associated as ToneTag merchants. This feature has been added using ToneTag software development kit enabling merchants to accept payment via Laptop, PC, Tablets, EDC, mPOS, smartphones and feature phones. The process is simple. The user needs to select sound payment option after selecting ‘Pay or Send’ in FreeCharge app. When the retailer enters transaction details into their payment device, a sound is emitted to the customer’s app. Authentication process takes place and ‘Pay Now’ button appears for completing the process. There are other developments around implementation of sound based payment systems. YES Bank has partnered with ToneTag for sound-based proximity payments on Yes Pay mobile wallet. It has collaborated with UltraCash for sound based payments as well. Bangalore based mobile payment solution provider iKaaz is also working along similar lines. Digital payment solutions company Bijlipay is also in talks with Tong Tang for this payment solution.

In-person mobile payment market’s transaction value was US$ 7,728 million in 2016 and expected to reach US$ 3,40,843 million in 2021. From 2015 to 2016, the growth rate achieved was 127.7% while expected CAGR from 2017 to 2021 is projected to be 102.6%.

To know more and gain deeper understanding of mobile payment industry in India, click here.